Welsh Liberal Democrats Councillor for Cwmbwrla Ward, City and County of Swansea - Visit my main website at www.peterblack.wales

Thursday, June 13, 2013

Getting used to coalitions and austerity

In today's Guardian Martin Kettle has a sobering article in which he argues that austerity and coalitions of one kind or another are her to stay for the forseeable future:

The reality of British politics is at the interface between Liam Byrne's infamous "there's no more money" remark in 2010, and the general decline of the major political parties that has been so marked over half a century. In the immediate postwar period almost everyone voted Labour or Conservative. Now no more than two-thirds of voters do. The result is coalitions – either between parties or within them.The central fact about British politics in 2013 is that we are beginning to get it. The economy is not recovering, but surviving. Politics is taking time to adjust. At present it is like an F1 race permanently led by a safety car. The rebalancing of the economy is talked about and desired on all sides but isn't happening because, short of a command economy for which there is no serious appetite and which would almost certainly fail in its own way, it cannot be legislated. The financial sector still overshadows everything else. And the deficit is too large.So political parties find themselves, against their will and instincts, all in the same boat. The Tories still hate higher taxes. Labour still hates cutting government programmes. The arguments between the parties are still real. But they are constrained by the single great fact of austerity. And austerity is not going to go away.

He says that the public mood is not really for radical change, although there is a flirtation from time to time and that political parties, with their comfortable visions and urge to do something memorable, are struggling to adapt to it:

The truth is that politics has changed and that the change will last a long time. A week ago the IFS argued, in yet another report, that the failure to balance the budget deficit by 2014-15, as planned in 2010, means that the next parliament may be just as dominated by spending controls and efficiency savings as this one has been. Most of the deficit, after all, is structural, so can't be reduced by growth alone. Difficult decisions about programmes and entitlements are not going to disappear even if sustained growth returns.Party leaders understand this. David Cameron clearly does. This month's spending review will offer more – a lot more – of the same, and the prospect of large further cuts still to come during the next parliament. It's not where he would like to be, but where he is. But last week's speeches by Ed Miliband and Ed Balls show they get it too in their own way. If there is a Labour government after 2015, it will not only cap the welfare budget – the details are a source of dispute – but will cut departmental spending still further.This is not a great ideological battle. That dimension is often exaggerated. The difference between a public spending-to-GDP ratio of 40% and one of 50% is a significant one. But beware the narcissism of small differences. The big truth is that any government will spend 40%, not that there is an argument about another 10% between the parties. That said, it is high time the left had a debate about the figure that it prefers. There is certainly a limit below which a decent level of solidarity is not possible. But it is not self-evident that higher is invariably better or sustainable.Is it pretty? No. Are there alternatives? Certainly. But they have to be consistent with looking reality in the eye. Since many of the problems are shared with other parts of Europe, it makes sense to address them together, not in competition. But looking in the other direction is not a serious option. The figures and the graphs tell stories of opportunity and contain truths that cannot be ignored. Not only will the 2015 election now be an austerity election, but the 2020 election may be one as well. Better get used to it.

"he rebalancing of the economy is talked about and desired on all sides but isn't happening because, short of a command economy for which there is no serious appetite and which would almost certainly fail in its own way, it cannot be legislated."

Oh yes it can be re-balanced by legislation but it isn't being done. For example: small start-ups should be exempt from National Insurance collections and allowed to take a 2% cut of VAT, i.e., small firms keep 2% or so of collected VAT.

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